es Suppose the returns on long-term corporate bonds and T-bills are normally distributed. Assume for a...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
es Suppose the returns on long-term corporate bonds and T-bills are normally distributed. Assume for a certain time period, long-term corporate bonds had an average return of 5.8 percent and a standard deviation of 8.9 percent. For the same period, T-bills had an average return of 4.3 percent and a standard deviation of 3.1 percent. Use the NORMDIST function in Excel to answer the following questions: a. What is the probability that in any given year, the return on long-term corporate bonds will be greater than 10 percent? Less than O percent? Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. b. What is the probability that in any given year, the return on T-bills will be greater than 10 percent? Less than 0 percent? Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. c. In one year, the return on long-term corporate bonds was -4.7 percent. How likely is it that such a low return will recur at some point in the future? T-bills had a return of 10.62 percent in this same year. How likely is it that such a high return on T-bills will recur at some point in the future? Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. a. Probability of return greater than 10 percent Probability of return less than 0 percent b. Probability of return greater than 10 percent Probability of return less than 0 percent % % % % c. Probability of return less than -4.7 percent % Probability of return greater than 10.62 percent + % es Suppose the returns on long-term corporate bonds and T-bills are normally distributed. Assume for a certain time period, long-term corporate bonds had an average return of 5.8 percent and a standard deviation of 8.9 percent. For the same period, T-bills had an average return of 4.3 percent and a standard deviation of 3.1 percent. Use the NORMDIST function in Excel to answer the following questions: a. What is the probability that in any given year, the return on long-term corporate bonds will be greater than 10 percent? Less than O percent? Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. b. What is the probability that in any given year, the return on T-bills will be greater than 10 percent? Less than 0 percent? Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. c. In one year, the return on long-term corporate bonds was -4.7 percent. How likely is it that such a low return will recur at some point in the future? T-bills had a return of 10.62 percent in this same year. How likely is it that such a high return on T-bills will recur at some point in the future? Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. a. Probability of return greater than 10 percent Probability of return less than 0 percent b. Probability of return greater than 10 percent Probability of return less than 0 percent % % % % c. Probability of return less than -4.7 percent % Probability of return greater than 10.62 percent + %
Expert Answer:
Posted Date:
Students also viewed these finance questions
-
Why does the cost to load in an unconstrained system is lower compared to contrained with N - 1 Contingency in PLEXOS Modelling? What are the factors that affect the increase in cost to load during...
-
At time t = 0, a particle with charge q = 12 C is located at x = 0, y = 2 m; its velocity at that time is v = 30 m/s i. Find the magnetic field at (a) The origin (b) x = 0, y = 1 m (c) x = 0, y = 3...
-
What factors are needed to support successfully charging the consumer for online content?
-
Which of the following matches is performed in evaluated receipt settlement (ERS)? a. the vendor invoice with the receiving report b. the purchase order with the receiving report c. the vendor...
-
Jerry and Lois Gower own and operate the Gower Painting Co. The couple is insured under a Homeowners 3 policy with no special endorsements. The policy has a $100,000 per occurrence limit for personal...
-
Item4 6points ItemSkipped eBook Print References Check my workCheck My Work button is now enabled3 Item 4 El Gato Painting Company maintains a checking account at American Bank. Bank statements are...
-
You have a two-stock portfolio. One stock has an expected return of 12% and a standard deviation of 24%. The other has an expected return of 8% and a standard deviation of 20%. You invested in these...
-
In today's globalized world, understanding the complex dynamics of international politics and civic society is crucial for responsible citizenship. This discussion assignment aims to analyze the...
-
Xin takes out a 20-year mortgage for $800,000 with a fixed rate. The stated annual interest rate of the mortgage is 12% and is compounded monthly. Xin will make 240 payments of $6,400 per month,...
-
Maranah Med Ltd. Manufactures a product each unit of which requires two kilos of a material called prudice.Production for the months of September 2011 to January 2012 is budgeted as: 2011Number of...
-
5. A 90-kg block on a 30 slope is pulled up the slope to a vertical height of 200-m above its initial position. a. If the pull is on a frictionless surface, what minimum force is necessary to move...
-
Zoe owns a parcel of Old System land near Nowra, NSW called Bluewaters, which shepurchased in January 2009. Bluewaters was undeveloped land in what had been apredominately agricultural area. The...
-
What do you think is meant by informal controls (as opposed to formal controls), and are they a better type of management control?
-
A. Select a recent issue (paper or online) of Report on Business Magazine, Canadian Business Magazine (online only), Bloomberg Businessweek, Fast Company, The Economist, or another business magazine....
-
An increase in the demand for land will a. increase the price of land and increase the quantity of land supplied. b. increase the price of land but not change the quantity of land supplied. c....
-
At low levels of interest, borrowers will want to borrow ___ and suppliers of funds will want to supply ___. a. more; less b. less; more c. more; more d. less; less
-
How is the price of capital determined?
Study smarter with the SolutionInn App